Electronic payment systems are used to receive credit and other electronic payment data and to transfer an authorization request that includes the credit transaction data to an authorization system. The authorization system then verifies whether the form and amount of payment is valid, and an authorization code is generated for transmission to the point of sale that authorizes the transaction, denies the transaction, notifies the operator or potential criminal activity, or provides other suitable data. In this manner, fraudulent activities using electronic payment on credit cards can be minimized.
Current authorization systems utilize the public switched telephone network for authorization. The point of sale terminal must establish a telephone connection with the authorization host, such as by a dial-up connection or by using a leased line with a permanent connection. Such connections through the public switched telephone network or through leased lines are expensive to maintain, and may experience communications failure.
A second method by which point of sale terminals may be connected with an authorization host is through the Internet or other online communications media through a virtual private network device. The virtual private network device encodes data received from the point of sale terminals and then decodes the data at the authorization host. Such virtual private network devices cannot be remotely programmed, are typically made from hardware or otherwise not designed to be updated with new programming, and do not provide communications from the authorization system to the point of sale system, such as to determine the status of point of sale system. In addition, such virtual private network devices are not compatible with standard network architecture and must be installed outside of the network firewall. In addition, failure of the virtual private network device can result in communications failure.
Thus, while credit transaction authorization is presently performed over communications media, such authorization either is at high cost, in that it requires connections to be made over the public switched telephone network, or in that it requires expensive virtual private network devices that are not compatible with existing networks and which must be changed out in the event of a security violation. In addition, the credit transaction data that can be transmitted is limited and cannot be readily modified in response to standards changes, technological changes, or for other reasons.